Etsy shares tumbled more than 9% to close Wednesday's trading below $52.50.
The sharp decline in Etsy shares followed the company's quarterly earnings report on Wednesday morning which showed weaker than expected results for the online retail website.
For its most recent quarter, Etsy provided earnings per share data that reflected an $0.11 cents beat over analyst expectations.
Despite the good news on the bottom line, Etsy’s revenue for the quarter disappointed investors and analysts. The company’s revenue came in nearly $10 million lower than its $861 million target, reflecting growth of only 1.2% on a year-over-year basis.
Etsy’s revenue slowdown is traced to consumers shifting their taste to lower price and faster delivery outlets. Companies like Amazon.com (AMZN) and Walmart (WMT) appear to have taken some of the market share as consumers are looking for less-expensive products delivered quickly.
Another similar online retailer, Ebay (EBAY), has also seen slowing of its revenue to singl-digit growth. Trends are beginning to show that Etsy’s more highly discretionary offering have fallen more out of favor with online consumers of late.
Etsy shares have traded in a wide range since November, with the stocks 50-day moving average turning slightly bearish. The stock’s recent high of $57.50 breached the stock’s 200-day moving average. That trendline is in a bearish bearish trend.
Shares are now trading with the negative bias as they head towards $50 level, the sight of psychologically significant support.
Etsy breached the $50 level in October and November of 2024, though the holiday season and the post-election rally help lift the shares as high as $62.50.
With pressure mounting on consumer discretionary, Etsy stock is likely to lose its technical battle at $50 ahead of further declines.
Shares of Etsy have maintained a long-term bearish outlook since January of 2022. Etsy’s current price target is $40.
